1. What is a Lump Sum Return Calculator?

Definition: This calculator determines the percentage return on an initial lump sum investment based on its future value.

Purpose: It helps investors quickly assess the performance of their investments in percentage terms.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( \text{Return} \) — Percentage return on investment
• \( FV \) — Future value of the investment ($)
• \( P \) — Initial lump sum investment ($)

Explanation: The formula calculates the profit (FV - P) as a percentage of the original investment (P).

3. Importance of Return Calculation

Details: Understanding investment returns helps in comparing different investment opportunities and assessing financial performance.

4. Using the Calculator

Tips: Enter the future value and initial lump sum amount in dollars. The initial investment must be greater than $0.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative return mean?
A: A negative return indicates that the investment lost money - the future value is less than the initial investment.

Q2: Does this calculator account for time?
A: No, this calculates simple return. For annualized returns considering time, you would need a different calculator.

Q3: Can I use this for any currency?
A: Yes, as long as both values are in the same currency, the percentage return will be accurate.

Q4: What's considered a good return?
A: This depends on the investment type, time horizon, and risk tolerance. Typically, returns are compared to benchmarks.

Q5: Does this include dividends or interest?
A: Only if they're included in the future value you input. The calculator only sees the total ending value.